The Bank of Montreal (BMO) has dismissed Doo Sik Lew, a managing director on its US mortgage-backed securities desk, in connection with a regulatory investigation into misleading marketing practices. The disclosure was made in a filing with the Financial Industry Regulatory Authority (Finra) and comes as BMO faces heightened scrutiny over its mortgage securities operations.
Lew, who has 18 years of industry experience and six years at BMO, was discharged last month amid allegations of “potential deceptive structuring and marketing practices” related to the sale of certain mortgage-backed securities. The US Securities and Exchange Commission (SEC) had previously announced its intention to file enforcement actions against Lew. While Lew is cooperating with the investigation, he disputes the SEC’s claims, according to the Finra filing.
The allegations align with a broader settlement BMO reached with the SEC regarding its handling of mortgage-backed bonds. The bank recently agreed to pay over $40 million to resolve claims that employees within its capital markets division misled clients by using inaccurate information to market the securities. The settlement includes $19.4 million in restitution to affected parties, $19 million in civil penalties, and $2.2 million in interest payments.
BMO has neither admitted to nor denied the SEC’s allegations but has emphasised its commitment to ethical practices. In a statement, BMO spokesperson Jeff Roman reiterated the bank’s dedication to high standards and noted that the matter has been resolved. However, Roman declined to comment on whether Lew’s dismissal was directly linked to the SEC investigation or the settlement.
The SEC’s investigation highlighted supervisory failures within BMO’s capital markets division, alleging misconduct occurred from December 2020 to May 2023. While the settlement did not name specific employees, Lew’s involvement points to heightened regulatory focus on individual accountability within financial institutions.
As the financial sector faces increasing regulatory oversight, BMO’s actions signal an effort to reinforce internal compliance and address reputational risks tied to its mortgage-backed securities operations.
